Proper Benefit Cost Analysis Key in Mitigation Grant Application



Whether you know it as a benefit cost analysis or a cost benefit analysis, conducting one is critical to any hazard mitigation project. When you perform a BCA, you make a comparative assessment of all the benefits you anticipate receiving fromyour project and all the costs associated with introducing it, completing it and addressing the challenges the project brings.

A BCA finds, quantifies and adds all the positive factors. These are the benefits. Then it identifies, quantifies and subtracts all the negatives. Those are the costs. The difference between the two indicates whether the planned measure is advisable. Even though the project may be deemed ineligible, it may still be prudent to forge forward. The trick to doing a BCA well, is making sure you include all the costs and all the benefits — and properly quantify them.

Regardless of which grant program a sub- applicant is applying to, the application must present the project’s clear benefit(s) if it is to be successful.

FEMA Benefit Cost Analysis Re-Engineering (BCAR)

SOURCE: FEMA’s BCA Reference Guide 2009

FEMA’s decision to re-engineer the existing BCA software was made to meet the technical needs of today’s user and address advances in hazard assessment methodology, as well as in FEMA policy. To accomplish these objectives, FEMA met with more than 300 users to gather data, feedback and comments. This input contributed to an integrated software package that provides current information and user guidance to a once-complex process. It has also resulted in a streamlined approach for meeting FEMA’s cost-effectiveness requirements for hazard mitigation projects.

The goals were to develop methodologies that are based on well-defined scientific and engineering principles, that accurately represent structural performances, and that simplify the analysis process for the average user. The intent of the BCA module remains the same.

Also re-engineered was the Limited Data module. It was replaced with the Damage Frequency Approach (DFA) module, which is more flexible than the flood module and therefore the most frequently used module for FEMA’s Hazard Mitigation Assistance (HMA) grant applications.

The DFA module analyzes proposed mitigation projects based on damages (either historical or anticipated) and the future damages that would be avoided. This is extremely helpful when no FEMA Flood Insurance Study is available. The DFA module is commonly used to analyze stormwater management and drainage improvement projects, but may also be used to analyze a wide range of hazards including floods, landslides, snow/ice storms and earthquake mitigation for utility projects. The DFA module is recommended in place of the flood module when key structural information such as the base flood elevation (BFE) and/or Flood Insurance Rate Map (FIRM) is not available.

Another important use for the DFA module is the secondary analysis for mitigation projects that do not result in a BCR of 1.0 or greater in the flood module. If the BCR in the flood module is less than 1.0 for a project but 1.0 or greater using the DFA module, the complete and well-documented DFA module may be submitted in a project grant application. An explanation of why the DFA module was used in lieu of the full flood module should be provided.